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August 9, 2009

Nortel Q2 results beat expectations

Mike Zafirovski steps down as its chief executive

By CBR Staff Writer

Nortel Networks, which filed for bankruptcy protection in January, has reported a better than expected results for the second quarter of 2009.

The company has also confirmed that its president and chief executive officer Mike Zafirovski would step down.

Zafirovski, said: Since filing for creditor protection, the company has been successfully stabilising its businesses and maintaining customer commitments and innovation platforms. Results for the second quarter demonstrate solid financial performance over the first quarter, while customer metrics remain strong.”

The company has reported revenue of $1.97 billion in the second quarter of 2009, down 25% compared to revenue of $2.62 billion in the same period last year. The company said that the reduction was primarily due to continuing economic downturn and the uncertainty created by the Creditor Protection Proceedings.

However, revenue increased 14% compared to the first quarter of 2009. Gross margin decreased 4.9 percentage points to 38.2% compared to the same period a year-ago. This includes charges related to workforce and other cost reduction activities. The company had a cash balance of $2.56 billion at June 30, 2009, compared to $2.48 billion at March 31, 2009.

The company’s net loss was $277m in the second quarter of 2009, compared to net loss of $113m in the same quarter of 2008.

Carrier Networks revenue dropped 20% to $920m, Enterprise Solutions revenue decreased 28% to $465m, Metro Ethernet Networks revenue decreased 27% to $333m and LGN revenue decreased 37% to $199m, compared to the same period last year.

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